Lawmakers, hospitals in talks on legislation to lower hospital prices

INDIANAPOLIS, Ind. − Gloria Sachdev is confident the way hospital pricing has worked in Indiana is going to change this year.

"There will be something," said Sachdev, the president, CEO and board chairman of Employers’ Forum of Indiana of General Assembly action this year to bring hospital pricing in line with the rest of the nation.

In the meantime, her organization has developed an online tool that allows insurers and families to compare hospital costs before they are incurred as one way to better control what nonprofit hospitals are charging.

Much attention has been focused on HB1004, legislation that appears to be a priority of Republican leadership in both the Indiana House and Indiana Senate. The bill seeks to reform the healthcare marketplace by increasing competition among hospitals and insurers and supporting independent physicians while placing guardrails on hospital prices.

"Legislative discussions are happening now on HB1004," said Laura McCaffrey, vice president of public affairs and communications for the Indiana Hospital Association. A statement is expected in coming days concerning an outcome of the talks.

“As legislative discussions continue on HB 1004, Indiana hospitals remain committed to doing our part to reduce overall costs if done in a thoughtful partnership with policymakers that holds every segment of the health care industry equally accountable," IHA President Brian Tabor said in a statement Wednesday. "Also, we must address Medicaid underfunding by the State and poor physician payment by insurance companies as part of the equation."

Tabor went on to say a solution will involve more than legislators.

"Ultimately, true health care affordability will require all stakeholders – hospitals, physicians, insurers, drug and device manufacturers, and lawmakers – to come to the table and develop transparent metrics based on real prices along with sustainable solutions that benefit patients,” he said.

HB1004 is designed to bring down costs to the national average, which is 260% of the federal Medicare reimbursement rate. If a nonprofit hospital charges amounts for health care services that exceeded 260% of the federal Medicare reimbursement rate, under HB 1004, the state will assess a penalty against the hospital. Revenue collected from the penalty would be used to pay the state's share of the cost of Medicaid services.The bill also bans noncompete clauses for physicians while also helping physicians start independent practices.

A study in 2020 by the RAND Corp. determined that IU Health was the most expensive hospital system in Central Indiana, charging private insurers 333% of what it charges federal government through Medicare. Statewide, it was second only to Parkview Health System in Fort Wayne, which was charging 388% of the Medicare amount.

IU Health is the health care network that operate IU Health Ball Memorial Hospital in Muncie, IU Health had inpatient fees that were 65% higher than the national average for hospitals and its outpatient fees were 46% higher, according to Hoosiers for Affordable Healthcare.

Statehouse leaders from the House and Senate sent letters in December 2021 asking hospital and insurance executives to show the legislatures plans to reduce hospital pricing in Indiana and bring treatment charges at their facilities in line with the national norm by 2024, otherwise the General Assembly would consider action to bring the pricing in line with the nation as a whole.

The plans were to be presented by Friday, April 1, 2022. IU health had already developed a plan that it said would hold prices flat and bring them to "national parity by end of 2025," Jenni Alvey, senior vice president and chief financial officer at IU Health, said last year.

IU Health was the only health network that answered the letters, and HB1004 appears to be the General Assembly's promised response to force prices down.

IU Health Ball Memorial Hospital declined comment for this story.

Michael Hicks, director of the Center for Business and Economic Research at Ball State University, said that the hospital networks did not take the General Assembly seriously. Even IU Health's plan to freeze prices, by his calculations, would not have reduced prices to the national average for 12 years.

Even if HB1004 passes in its current form, Hicks said, he would be surprised to see legislation that prevent hospitals from owning physician practices and specialty clinics.

"Ownership of physician practices and specialty clinics makes competition very difficult," he said.

If the legislature were to negotiate something less than HB1004, it would still likely be an improvement, he said

"Whatever happens, it's not likely to be the last of this issue," Hicks said.

Meanwhile, Sachdev says her group has developed an online tool called Sage Transparency that allows anyone with access to the internet to compare hospital pricing. The online dashboard allows consumers to include price as part of their decision-making process for choosing health care. The device can be accessed at employerptp.org/sage-transparency at no cost.

A hospital value dashboard gives users access to price and quality data for thousands of hospitals across the United States at no charge.

So far, more than 22,000 unique sessions have occurred since the tool launched.

This article originally appeared on Muncie Star Press: Lawmakers, hospitals in talks on legislation to lower hospital prices